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Sustainable Energy Bill, 2001 [ Seanad ] : Report Stage.

Wednesday, 6 February 2002

Dáil Éireann Debate
Vol. 547 No. 4

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An Ceann Comhairle: Information on Séamus Pattison Zoom on Séamus Pattison Recommital is necessary in connection with amendment No. 1 as it does not arise out of Committee State proceedings. Amendment No. 1 is consequential on amendment No. 43 and on amendments Nos. 44, 45 and 46, which form a composite proposal. I therefore propose to take amendments Nos. 1, 43, 44, 45 and 46 together by agreement.

Bill recommitted in respect of amendment No. 1.

Minister of State at the Department of Public Enterprise (Mr. Jacob): Information on Joe Jacob Zoom on Joe Jacob I move amendment No. 1:

In page 3, line 10, after “IRELAND” to insert “; TO AMEND THE GAS ACT 1976, TO AMEND THE ELECTRICITY REGULATION ACT 1999,”.

I thank my colleagues across the floor of the House for their co-operation in the recommital of amendments to Committee Stage for the purpose of dealing with these very important issues. Amendment No. 1 proposes to amend the Long Title of the Bill to reflect the changes I propose to make in amendments Nos. 43, 44, 45 and 46.

Amendment No. 43 provides for an increase in Bord Gáis Éireann's current borrowing limit, from £550 million to €1.7 billion. This increase is an integral component in ensuring the completion of the ongoing major infrastructure developments being progressed by the company, including the pipeline to the west and the second Scotland-Ireland interconnector. In the next two years the majority of the capital expenditure involved in [1422] this huge investment programme will be utilised as materials are ordered and construction begins. This increase in the statutory borrowing limit of the company is essential as it will provide BGE with the flexibility to manipulate its borrowings to obtain the best value in terms of interest rates and allow the board the resources it requires to manage and successfully complete the projects.

Amendments Nos. 44 to 46, inclusive, provide for necessary technical amendments to the Electricity Regulation Act, 1999, which deals with public service obligations. The principle of public service obligations was debated in detail and accepted at the time of the passing of the Act. The Minister there proposes to introduce a public service obligation order under the Act, requiring the ESB to purchase the output of certain peat and renewable electricity generating stations in the interest of security of supply and environmental protection.

The EU Commission approved PSO arrangements in respect of peat generation on 30 October last and in respect of renewable sustainable generation on 15 January. The Office of the Attorney General has deemed it necessary to amend section 39 of the 1999 Act to ensure compliance with the EU Commission requirements in so far as the PSO funding mechanism is concerned.

These amendments essentially constitute a technical modification to section 39 to ensure the PSO funding mechanism relates to the maximum import capacity of various categories of electricity accounts held by final customers rather than the actual consumption of electricity by final customers as had been provided for in section 39 of the 1999 Act. In the latter case, the EU Commission would have insisted that imports of electricity be exempted from the levy and this would have an extremely distorting impact on the Irish electricity market. The revised PSO funding mechanism will not result in an unfair burden on any category of customer and will not distort the market. There are other related amendments to section 39 of the 1999 Act to facilitate the smooth operation of the PSO levy mechanism.

The Sustainable Energy Bill was identified as the most appropriate vehicle to provide for such urgent technical amendments. The PSO order needs to be made as soon as possible to facilitate the rapidly narrowing time frame for the construction by the ESB of the two new fire stations at Shannonbridge and Lanesboro and the orderly closure of the existing peat stations as already stated. The amendment is also urgently needed to pave the way for the issuing of contracts to the successful bidders in the most recent Aer 5 competition. Deputies will be aware that the announcement was made on Monday. I am sure everybody joins me in the aspiration to see these projects built at the earliest possible date. In that context it is appropriate that this Bill is the vehicle for the amendments.

The provisions relating to the amendment of the Electricity Act, 1999, will be consolidated in [1423] the forthcoming electricity Bill which will shortly be sent to the Chief Parliamentary Counsel for drafting. It is due to be introduced next year.

Mr. Sargent: Information on Trevor Sargent Zoom on Trevor Sargent I was shocked to learn that the Sustainable Energy Bill was being used as a vehicle to put through the PSO aspect to burning peat. It is strange to regard the gas loans as part of a sustainable energy strategy in the long-term. As mentioned during the debate on the Gas (Interim) (Regulation) Bill, gas has a role in a transition period to a sustainable energy economy but it cannot be depended upon. It is finite. It is also a greenhouse gas emitter. The Minister did not refer to that. It is simply a case of increasing the loan facility for Bord Gáis and thereby increasing gas consumption. That is not in line with what I would think is supposed to be the spirit of sustainable energy legislation.

As the Minister for Foreign Affairs mentioned in his letter to us in the committee, this is a miscellaneous amendment to the Sustainable Energy Bill. If it is miscellaneous it should be in line with the spirit and the principles of the Bill. Whatever about the gas amendment, the PSO that allows for favourable treatment for peat fired generating stations is certainly an oxymoron in terms of sustainable energy. It is not reconcilable with sustainable energy strategy, no matter how strong the case for peat fired stations is from a political rather than technical background. It does not stand up to scrutiny.

The Minister mentioned security of supply. Security of supply is a short-term consideration when it comes to peat. We are running out of peat. I fail to see how he can argue that this is helping security of supply. It would be far preferable to focus on energy conservation and renewable energy sources if we are serious about security of supply and having our fossil fuel resources safeguarded for use in emergencies rather than burn them as quickly as possible and then wonder what we will do next. That appears to be what is happening.

When the Minister mentions environmental protection as a reason for this PSO it is even more mystifying as to where he is coming from. It is widely known, and the Minister knows it as much as anybody else, that peat fired electricity generation is not good in terms of greenhouse gases. It may be cleaner than it was in the past but there is still a low level of compliance with greenhouse gas emission targets. When all is said and done, this set of amendments turns the “polluter pays” principle on its head and we have a new principle, the “victim pays principle”. Not only will there be a surcharge on the ESB bill initially from this public service obligation to burn environmentally unsound peat but in only a matter of years, 2008-2012 most likely, greenhouse emissions trading will be introduced and again taxpayers will pay on the nose, on top of the surcharge on the ESB bill, for having overshot our greenhouse gas emissions targets once [1424] more. It is astonishing that we have integrated into a Sustainable Energy Bill, if the Government amendments are passed, dimensions which are at variance with the principles of such a Bill. That is the view of many environmental NGOs and people who are interested in the energy question. It is important to relearn our obligations under the Kyoto Protocol and the definition of “sustainable energy” because these amendments are an oxymoron when set beside the principles and objectives of an energy sustainable policy.

Mr. Stanton: Information on David Stanton Zoom on David Stanton It is unfair to present us with these amendments at the eleventh hour. It raises questions as to why this is done. People will ask whether the Minister of State is trying to get something through quickly without proper scrutiny. There is always a danger when this practice takes place that mistakes will be made. I ask the Government not to do this. The least the Minister of State could have done was to let us know three or four days ago that he was about to do this and give us an opportunity to reflect on the amendments and to provide a briefing. To surprise us with these amendments at the eleventh hour is wrong and most unfair and raises all kinds of suspicions as Deputy Sargent has said. Why does the Minister of State insist on doing it this way? I accept he mentioned that certain developments occurred on 30 October. That is a long time ago. I am sure he had these amendments in mind for some time and he could have let us know about them.

I recognise the importance of these amendments and the importance of a PSO but I see a contradiction in having them inserted in the Sustainable Energy Bill. However, there is a debate as to whether peat is a sustainable energy source. In Scandinavia, it is said it is a renewable energy source and it has mechanisms in place where the bogs can be renewed.

Mr. Sargent: Information on Trevor Sargent Zoom on Trevor Sargent After about 10,000 years.

Mr. Stanton: Information on David Stanton Zoom on David Stanton It is happening much faster than that. I have been there and I have seen them. Will the Minister of State tell the House what acreage of peat remains in the country and how long he expects the resource will last? It is important to know that. How will the price of electricity affect the consumer? Will it go up or down or remain the same? If the price rises, will domestic or industrial consumers be affected? What will be its impact? I understand there has been a shift in various rates. I ask the Minister of State to clarify the impact the measure will have on the consumer for the benefit of the many thousands listening to this very important debate and the reporters taking copious notes in the Press Gallery?

Mr. Gilmore: Information on Eamon Gilmore Zoom on Eamon Gilmore I am deputising for my colleague, Deputy Stagg, who is attending a meeting of the party Whips. Perhaps the Acting Chairman will assist me on a point. I understand we are now on [1425] Committee Stage having recommitted amendments Nos. 1, 43 and 44 and several attendant amendments. Is this correct?

Acting Chairman (Mr. McGinley): Information on Dinny McGinley Zoom on Dinny McGinley Yes.

Mr. Gilmore: Information on Eamon Gilmore Zoom on Eamon Gilmore I draw the attention of the House and the roughly 60 journalists who cover its proceedings to what is going on here. The proposal in amendment No. 43 is to increase the borrowing limit under the Gas Act by in or around €1 billion. Immediately after debating this Bill we will debate the Housing (Miscellaneous Provisions) (No. 2) Bill, 2001, which proposes to increase the borrowing limit of the Housing Finance Agency by in excess of €4 billion, not for housing purposes, but for a variety of infrastructural purposes, including water, sewerage and waste management.

Like a conjurer, the Government, in the personage of the Minister for Finance, Deputy McCreevy, held up a budget before Christmas and informed the House there would be no borrowing as it had balanced the books. All the Fianna Fáil Members lined up behind the Minister to applaud him for reaching the line without borrowing. It is now clear what is happening. The Government is using legislation which would not normally attract front page headlines to introduce borrowing by the back door. For example, today the House has before it two legislative proposals which will increase Government borrowing limits by €5 billion. As it happens, the Labour Party agrees with the principle of borrowing for capital and infrastructural purposes. Therefore, I have no great difficulty with this.

We know that all aspects of the national development plan, whether in relation to energy or physical infrastructure, are way behind schedule. The construction industry has criticised the Government because the national development plan and infrastructural projects are not proceeding apace and for effectively holding back funding for it. A person with even a minuscule appreciation of economics can see that borrowing is going to be a fact of life with regard to the funding of the national development plan. The problem, however, is that we have a Government which publicly pretends it is not borrowing and will not do so, and a Minister for Finance who, in his five years in office, has made a career of declaring he will not borrow. Because he has got himself into a hole in which borrowing for capital and infrastructural purposes cannot be avoided, the Government has found a means by which it can borrow by the back door, namely, using legislation which, as I said, would not normally attract front page headlines, to introduce borrowing at the last minute.

We have reached Report Stage of the Bill. However, because a Government amendment contains a new proposal to introduce borrowing, it must be recommitted. The Government, which preached a message of no borrowing and based its budgetary strategy on the fiction that there [1426] would be no borrowing is, in effect, introducing proposals by which borrowing will take place through State agencies rather than directly through the Exchequer. The amendment is very simple. It is a proposal by a Government which pretends publicly it is not borrowing to borrow by the back door.

Acting Chairman: Before I call Deputy Connaughton I wish to correct a comment I made earlier. I understood we were on Report Stage when in fact this amendment had been recommitted which means Members may speak as many times as they wish.

Mr. Connaughton: Information on Paul Connaughton Zoom on Paul Connaughton I wish to raise several points, particularly with regard to the PSO and the relationship between Bord na Móna and the ESB. I make no secret of the fact that my angle on the issue is different from Deputy Sargent, for whom I have great respect.

Mr. Gilmore: Information on Eamon Gilmore Zoom on Eamon Gilmore There are not many bogs in north Dublin.

Mr. Sargent: Information on Trevor Sargent Zoom on Trevor Sargent There is a very important bog in north Dublin, the Bog of the Ring.

Mr. Connaughton: Information on Paul Connaughton Zoom on Paul Connaughton I want to bring a little balance to this very serious matter. There is no reason we will not be left with a huge amount of bogland, given its immense size. Despite the tiger economy of the past five to seven years, vast areas did not benefit from a single job created by the promotion of foreign investment by the IDA. My constituency, which is peripheral to this debate, happens to be one such region, as are parts of counties Offaly and Longford. The only asset these regions have possessed since my childhood and for generations before were the boglands.

About 25 years ago Bord na Móna decided to build a peat briquette factory in Ballyforan on the border between County Galway and County Mayo, a place Deputy Gilmore will know extremely well. The company went to the trouble of buying 20,000 acres of virgin bog which, to put it in the language of east Galway, a snipe could not stand on. In other words, it would cost too much to drain, had never been cut for turf and could not, therefore, be used. It was bought from the farming community and others at a knockdown price in County Galway, which I know best, County Roscommon and parts of County Offaly.

While it may not have been worth much, I distinctly remember a commitment was given at the time to create jobs in the factory. Because there would be jobs where there were none and the sons and daughters of the bog owners would get them, they felt they would get their money back indirectly. Unfortunately – in this respect successive Governments share the blame – the factory was not built because there were no markets.

What happened? The half drained 20,000 acres, which could not be used for any other purpose, [1427] changed from a bird sanctuary to another use during the years. The power station at Shannonbridge, like the one in Lanesborough, operated using a technology that did not fit the environmental standards of this age. Believing it had an absolute right to proceed with the work, Bord na Móna went to a great deal of trouble to successfully acquire a technology compatible with today's standards. Because it is almost drained out, the area of bogland concerned, located in four counties, cannot be used for other purposes. This bogland has no connection with raised bogs which have environmental value. This is a very important point. The technology and the funding are in place. I understand there was an objection to An Bord Pleanála and that a decision will be made on it in the next couple of weeks.

I refer to the several hundred families in the midlands, east Galway and in Roscommon and to the PSO about which we are talking and the amendment the Minister of State is introducing today which has to do with the electricity regulation Act, if I understand it correctly. What this means, in effect, is that the ESB and Bord na Móna via the Government have been able to do a deal on the price of the raw material. If I am wrong, the Minister of State should tell me, but that is my understanding. Furthermore, I understand that for a number of business reasons, it is important that this amendment is passed today. If it is as important as I think, I thank the Minister of State for introducing that part of it. It is important that we show everyone concerned that there are much needed jobs involved in this development and say that we are not, under any circumstances and irrespective of the lifetime of those bogs, talking about the raised bogs which many botanists and others want to preserve for generations. I want to make that clear. A specific area of the country has been earmarked for this purpose for many years.

When replying the Minister of State might outline the exact connection between the amendment which will be put through via Bord na Móna and the ESB. Will he explain the significance to the ESB under that set of circumstances?

Mr. Sargent: Information on Trevor Sargent Zoom on Trevor Sargent I have listened with great interest and, as Deputy Connaughton will know, I did not mention the habitat issue because I appreciate there are different types of bogland and areas where peat has been extracted. They have different values in terms of habitat protection. That is something to be dealt with presumably by the Minister for Arts, Heritage, Gaeltacht and the Islands, Deputy de Valera. I listened carefully to Deputy Gilmore as well and the points he made reinforced a suspicion I have in regard to the public private partnerships which are another form of borrowing given that it is the people who have to repay the investment over the years. The Government can claim it is not involved in the repayment but ultimately it is infrastructure.

[1428]The real issue I wish to home in on is that first of all we are talking about making an amendment to a Sustainable Energy Bill and that presumes we can stand over everything in that Bill being in line with the principles of sustainable energy. We have fallen far short of that objective in pursuing these amendments from the Government because there are alternatives if we are to have a debate on peat and the economic life of populations and communities in the midlands, in particular.

It is important to recognise that money will have to be spent on these peat stations. It is not as if they are going to grow on trees – to use the term which would be an introduction to a discussion on biomass which has potential where there is cutaway bog and where there is a need for energy generation, employment and the associated advantages and benefits. The cost of investing in peat fired stations is significant and involves major investment in those communities. I would not for one moment take away from the need for investment in those communities. This is not, however, the best way to spend the money, particularly as the rest of the consumers of electricity will pay part of the cost through a public service obligation. All of us will pay again on the double when carbon trading is forced on us because of our failure to comply with internationally agreed obligations, such as the Kyoto protocol which, as the Minister of State knows, is only the start of those obligations. That is a cost at which we are looking down the line.

It is very short-sighted to say this will be an assistance to communities when those communities will benefit from only part of the money being spent. In the long-term, they will end up paying for the mistakes we are about to embark on if this Government amendment is passed. The thinking here is short-sighted and, to add insult to injury, it is being included in a Sustainable Energy Bill where it does not belong. Let it be separate and let us discuss the merits of the issue. To try to tag it on, as the Minister for Foreign Affairs, Deputy Cowen, would say, as a miscellaneous amendment to this Bill is wrong and it certainly does not assist us in developing a sustainable energy economy.

Mr. Jacob: Information on Joe Jacob Zoom on Joe Jacob In an ideal world, the Sustainable Energy Bill would not be the place in which to introduce measures which involve fossil fuels such as peat and gas, even though gas is the cleanest of all our fossil fuels and a fuel on which we will be dependent for the foreseeable future. In the same ideal world, if we could become fully dependent on sustainable energy production in the morning, next week or next year, we would all be very pleased but that will not happen in the real world. As a matter of principle, however, it is difficult to disagree with what Deputy Sargent said. Deputy Connaughton emphasised the social aspect which is important.

I regret these measures became necessary and that they were not incorporated in the original drafting of the Bill. However, it is not quite the [1429] 11th hour as Deputy Stanton said. Last week I wrote to colleagues opposite to inform them of the two sets of essential amendments to the Sustainable Energy Bill I hoped to bring forward following the passing of a necessary Dáil resolution I understood would be ordered immediately before Report Stage due to be taken on 6 February. That resolution was taken earlier today. I set out the detail of the amendments and I concluded with an invitation to Deputies. I said that if they considered it useful or necessary, I would be more than happy to arrange for relevant Department officials to discuss the proposed amendments with them in advance of Report Stage. It was all above board. I wanted to facilitate colleagues and I know some availed of that invitation while others decided not to.

I will now endeavour to deal with some of the comments made by Deputies. The existing peat stations will operate under an interim PSO until their closure in 2004-05. The new peat stations will ensure a better environmental option, they will be more thermally efficient and will be benchmarked to best international practice. We are assured they are state of the art new plants which will be far more environmentally friendly and emit far fewer noxious emissions than the antiquated ones in use at present. The six older and existing peat stations will close as the new stations come on line. As I said, these will be more efficient and, from an environmental point of view, it is better than keeping old stations open.

Deputy Sargent queried the surcharge on bills. The costs of peat and AER generation to be included in the PSO order are already embedded in the ESB's franchise tariff and in order to avoid any illegal cross-subsidy or over-recovery through a combination of the levy and existing tariffs, the Commission for Electricity Regulation will ensure the costs already allowed for in the franchise tariff are offset against the PSO levy when introduced. Essentially, therefore, there will be no net overall increase in electricity bills. The PSO levy element will be separately identified and explained on each electricity bill. The indicative amount to be recouped by way of levy for the PSOs is €617 million up to 2019, which represents no more than the additional cost incurred by the ESB, by comparison with the cost of a best new entrant.

Deputy Gilmore queried the increase in borrowings. I am sure he is sorry to be gone; he was really enjoying himself.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg He told me about it before he left.

Mr. Jacob: Information on Joe Jacob Zoom on Joe Jacob I hope the Deputy does not take up the cudgel. In terms of its current major gas infrastructure and investment programme, it has come to light that the current borrowings limit may not be sufficient to allow Bord Gáis the freedom it requires to receive the most advantageous loan arrangements. The company's projected borrowings at the end of July this year amount to [1430] almost €1 billion. In addition, it intends to issue a euro bond of €500 million this year, which will bring its potential borrowings to €1.629 billion. This euro bond is an ideal method of finance for the company as it is a long-term loan with no immediate repayments which will allow the company greater flexibility in managing the debt. That is the important aspect. This makes good commercial sense because we are talking about a company which has served the country well as a State body.

Bord Gáis is required by a Government decision to obtain an equity injection from a partner for the second interconnector. The amount catered for in its forecast is €165 million. There is no certainty, however, that the partner will be on board before the end of this year and this amount may have to be borrowed in the short-term pending the equity injection.

Deputy Connaughton raised a number of issues, particularly with regard to the social aspect of this matter. The price of peat in the fuel supply contract between Bord na Móna and the ESB for new peat stations is subject to the agreement of the Department of Public Enterprise in accordance with the PSO notification approved by the European Commission. That approval was given on 30 October last.

On the relationship between the PSO, the ESB and Bord na Móna, the position is that the State is requiring the ESB to build these new stations for security of supply purposes. That has the European Union's blessing, as the Deputy will be aware. As he emphasised, there will also be social consequences because it will ensure some employment in both State companies.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg I thank the Minister of State for making his officials available to Members on this side of this House, which I found very useful. In fact, I felt like a Minister again when the five officials arrived in my office with a great deal of information on the whole issue of PSOs and the requirement for this amendment, which I found very useful. It surprised me that the PSO level is as much as 2% of the total cost; I thought it would have been much less than that. I did not see any improvement in the PSO level arising from the new, more efficient use of peat which I thought would have reduced it somewhat. There is a rather complicated method of applying it to separate bills, but I welcome the idea that people will now be able to see the amount being used to support wind energy, other alternative energies and peat, which is a welcome move. There will be wide public support for this transparency.

As somebody who lives on the edge of the Bog of Allen in my constituency, I welcome the idea of more efficient use of peat and the closure of the old plants which were giving rise to pollution and other difficulties. That was an inefficient system of using the particular fuel. The new plant will give a better return per unit and result in better use of the energy, which is welcome.

[1431]I compliment the Minister of State and the Department on finding a method of convincing the European Union that imported electricity would not be exempt from the PSO. It was critical to Ireland's interest that that method was found. It is important that an acceptable method has been agreed with the European Union on the matter of state aid.

This is State borrowing and the calculations are hidden from the Department of Finance, which I am not sure should be the case. We support the necessity for borrowing for infrastructure. Because the company, with the support of the State, can make the borrowing, the need for part privatising the interconnector with a partner is thereby eliminated. I urge the Minister of State not to press too hard to find that partner because I am fearful that Bord Gáis is being fattened up and prepared for the kill, as it were, in the form of privatisation. If the Labour Party finds itself in government in the future, our policy is clear. We will not support the privatisation of State enterprise, including Bord Gáis, but I welcome and support the amendment the Minister of State has tabled.

Mr. J. Bruton: Information on John Bruton Zoom on John Bruton I am completely opposed to the amendment. It is an imposition on consumers for a project that is environmentally wrong from every point of view. This country is one of the worst offenders in Europe as far as the global warming problem is concerned. Not only does our agriculture contribute to methane, but our transport and, particularly, our electricity generation sector through coal and peat burning contribute disproportionately to Ireland increasing its emissions of global warming gases such as methane and CO2 more quickly than any other country. This is a serious problem facing the country and will cost us major amounts of money.

I had the privilege of attending a meeting of the Joint Committee on European Affairs last week where representatives came before us from the Department of Enterprise, Trade and Employment to explain, which they did extremely well, the situation in regard to emissions trading. As the House is aware, CO2 emissions trading will be introduced from 2004 and from 2006 we will have emissions trading for all the others. This means that the Irish people will be paying hard cash for the privilege of polluting the world's atmosphere, but what is proposed in the amendment is a form of double taxation because the Minister of State wants the permission of the House to impose a levy on us, as electricity consumers, in order that we may have the privilege of paying a further levy when we have to buy the right to pollute when an emissions trading regime is brought forward and we exceed our quota. This is a classic case of double taxation. Many left-wing politicians complained about double taxation when water charges were introduced and on other occasions, but I have heard no such complaint from Deputies of the left today.

[1432]I am amazed the parties that purport to be concerned about the environment have been silent about the outrageous proposal to introduce a levy on electricity consumers for the privilege of building something that will emit gases that destroy the environment. Non-polluting means of generating the same amount of electricity are available. Natural gas is available in abundance.

It has been argued that generating electricity in this way secures power supply. I respectfully suggest that such a notion is arrant nonsense as, once burnt, peat is gone. I understand the argument for building a peat powered station so that it would be there when all other means of electricity generation are unavailable. To operate such a station, however, does not make sense in relation to security of supply as every bale of peat that is burned reduces Ireland security of supply. As the House knows, there is a finite amount of peat in Irish bogs. If we want energy security, it makes sense to build a station for use in times of need, but it does not make sense to operate it now. Every day that the station operates will diminish the amount of peat available.

I do not know how long it is expected that peat will be available in the bogs contiguous to the proposed station, but let us say for the sake of argument that there is enough peat for 25 years. It is likely that difficulties regarding security of supply, when we are in genuine need of peat as a means of generating electricity, will arise about once every 50 years. We needed peat during the Second World War, which ended more than 55 years ago, and we should thank God that we had it. If this amendment is accepted by the House, we will destroy the peat so that it will be unavailable if there is a genuine lack of supply 25 years from now. Not only will we have burned the peat, but we will have paid for the privilege of burning it through the levy introduced by this amendment. We will pay for the privilege for a second time by entering into an emissions trading deficit when we have to pay for the right to generate electricity in this way.

I know there are constituency considerations and that Deputies representing counties Laois and Offaly feel this is the best way to proceed. Since the foundation of the State, Laoighis-Offaly has probably suffered more from depopulation than any other constituency. I do not think the west has fared as badly as Laoighis-Offaly in that time. The two counties have been held back by an excessive dependence on certain natural resources. An economy, whether of a county or of a country, will not prosper if it becomes overly dependent on one resource. Economies in the Middle East are dependent on a single product and would be unable to survive if anything were to happen to the oil industry. The economic structure of these countries has been built around one industry, which is similar to what has happened in County Offaly, which has become unhealthily dependent on the peat industry. The same could have happened to County Kildare if it were not for the fact that so much effort has been put into [1433] bringing foreign industry there. About 68% of jobs in County Kildare are in foreign owned industries, but that is certainly not the case in County Offaly.

If the Government has money to spend and wants to impose a levy on electricity consumers, it should allocate money to counties Offaly and Laois. This needs to be done in an ecologically sustainable way, however, and research is needed into the sustainability of peat. Resources can be used in ways that do not deplete them so quickly and do not pollute the atmosphere with gases that cause global warming. I do not understand the Government's political strategy, as it does not seem to be informed by long-term thinking.

Deputy Stagg congratulated the Government earlier for succeeding in pulling the wool over the eyes of the European Commission on this matter, but I do not join the celebration. There is no doubt that Irish politicians and officials are the best negotiators in Europe, but it can be argued that we sometimes negotiate too well for our own good. I was guilty of doing this in the 1980s during discussions on the extension of a gas pipeline to the North, when I got too good a price. The result of this was that the project did not go ahead as there was not enough money in it for the people to whom we were trying to sell the gas. The skills displayed by the Minister and his officials during the negotiations in Brussels, for which they have been praised by Deputy Stagg, have done the country no favours as the policy being pursued is not a good one in the long-term.

More needs to be done for counties Offaly and Laois than for any other counties in the BMW region, as they have suffered to a greater extent historically. Polluting the atmosphere and forcing consumers to pay levies is not the answer, however. A broad based economic strategy for the parts of Ireland that are dependent on peat is needed. The strategy should not be built on the depletion of natural resources, but on the enhancement of the substantial human resources of those areas. I have visited schools throughout counties Laois and Offaly and I have met some of the most talented young people in Ireland. The true natural resources of these counties is represented by their young people and not by the peat in their bogs. It is a grave error to ignore the under-exploited human resources of the midlands, while proceeding with the incineration of peat and the resultant pollution of the atmosphere.

It is entirely wrong of the Minister to have introduced this amendment, especially given that the name of the Bill it proposes to amend is the Sustainable Energy Bill. If one is to take seriously the advice of the Attorney General, it may be argued that this amendment does not come within the terms of the short title of the Bill. Amendments may not be introduced if they do not come within the short title and it is certain that this amendment has nothing to do with sustainable energy. The Minister's proposal relates to energy develop[1434] ment which is not sustainable, the direct opposite of the stated subject of this Bill. It reflects badly on the Minister and his officials that an amendment has been introduced which is contrary to the short title of this Bill. I ask the Acting Chairman to ask the Ceann Comhairle to examine whether this amendment is in order, as I contend that it is not. The amendment proposes to add to our capacity to generate electricity a structure which lacks sustainability.

It has become fashionable to refer to threats, opportunities and other matters with the acronym SWOTS. I do not know what the letters “s” and “w” stand for, but I am sure some of the Minister of State's management gurus will elaborate on this point. If I were to rank the threats to and opportunities for Ireland, I would suggest that the biggest threat we face is the progressive ageing of our population because the dynamism which makes this country grow depends on retaining our youth. The second biggest threat we face is the environmental snarl-up caused by the overloading of our infrastructure. The third biggest threat is the fact that Ireland is completely out of order in terms of the generation of greenhouse gases. We have no serious plan for dealing with this. We have Government White Papers comprising evasive speak which commit us to nothing. However, if one wishes to refer to them, one has something on paper which looks and reads well until one realises they contain no quantitative commitment.

The truth is that we have no policy for dealing with the third most important threat to us after ageing and infrastructural deficit, namely, that Ireland is out of control regarding the problem of greenhouse gases. This amendment will only add to that problem in a manner which is out of order as far as the Bill is concerned. I hope the Chair will rule the amendment out of order, but perhaps that is not possible. This is a bad piece of work and I am surprised more Deputies are not in the House to protest. We should help Laois and Offaly, but we should do so in another form rather than imposing an obligation on this country for which everyone, including those who work in the plant, will have to pay.

Acting Chairman: I wish to inform the Deputy that a motion was passed by the House this morning empowering it to debate these amendments as tabled.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg That motion was passed unanimously.

Mr. J. Bruton: Information on John Bruton Zoom on John Bruton Was it debated?

Acting Chairman: It was taken on the Order of Business.

Mr. J. Bruton: Information on John Bruton Zoom on John Bruton Putting measures through without debate means there is no analysis.

Acting Chairman: The House agreed to take these without debate.

[1435]Mr. J. Bruton: Information on John Bruton Zoom on John Bruton That proves I am right. The measure was out of order and the House had to use a special procedure to allow this to be introduced. This proves I am right and that this is not in order as regards the Bill.

Acting Chairman: We are governed by what was accepted and agreed.

Mr. J. Bruton: Information on John Bruton Zoom on John Bruton I am not quarrelling with the Chair. The Chair is just giving the House the bad news of its earlier misdeeds.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg Deputy Bruton made a welcome intrusion into the debate. I respect the Deputy, but he is making an unsustainable argument which should be addressed in the House. I am sure the Minister of State will point out that the Bill will not give rise to an additional charge on anyone. The charge already exists and is being restructured in a manner which takes account of capacity for use, rather than the previous system which was not as fair. The new system is acceptable to the EU and includes the importation of electricity. If this was not provided for it would distort the electricity market and prevent the generation of electricity south of the Border. That would be chaotic and Deputy Bruton's argument is unsustainable from that point of view.

Deputy Bruton suggests that we are building a new structure which will give rise to pollution. This facility will replace older structures which are far more polluting. The new structure will reduce pollution.

Mr. J. Bruton: Information on John Bruton Zoom on John Bruton The older structures did not have to be replaced in this way.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg I accept that point, but this measure will reduce the level of greenhouse gas emissions from energy production.

Mr. J. Bruton: Information on John Bruton Zoom on John Bruton That is like suggesting two wrongs make a right.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg No, this is a positive course of action. I am not here to defend the Government, but I have some knowledge of this issue. It is not like suggesting that two wrongs make a right. This proposal will provide for the building of a new, modern plant which will reduce greenhouse gas emissions. We are also making better use of the fossil fuel which is available, namely, peat.

Mr. J. Bruton: Information on John Bruton Zoom on John Bruton Peat is gone once it is burned.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg There is a finite reserve of peat, but the same is the case with all fossil fuels. We have time dates on other fossil fuels, including natural methane gas, for which Deputy Bruton has a preference, which we are using. I have argued in the House that it is dangerous for Ireland to put all its energy eggs in one basket, namely, natural gas. We should be careful as we will have to import most of our natural gas from other sources. Agreements are in place, but in emerg[1436] encies other states will turn off the tap. We must have other methods of generating energy such as peat, wind, wave and oil so we have a variety of sources. This will ensure a security of supply.

I reject Deputy Bruton's suggestion that this provision will involve double taxation. The Labour Party previously campaigned to end double taxation on water. As Taoiseach, the Deputy supported legislation to end such double taxation and I am sure he did so with a good heart and with full support.

Mr. J. Bruton: Information on John Bruton Zoom on John Bruton I give the Deputy full credit. I did so in the spirit of partnership.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg I am sure the Deputy did not do so because the Labour Party pressed for the measure in Government.

Mr. J. Bruton: Information on John Bruton Zoom on John Bruton That is not what the Deputy told the people at the time.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg I would suggest to Deputy Bruton's colleagues in Laois and Offaly that the arguments he is making are unsustainable and extraordinary as they take no account of the reduction in greenhouse gas emissions which this measure will bring about in their area. The Deputy's proposal would have dramatic and disastrous social and economic effects for Laois, Offaly and other areas in which this industry is thriving.

Mr. Sargent: Information on Trevor Sargent Zoom on Trevor Sargent I was interested in the contributions of the two previous speakers. It is important to listen to Deputy Bruton's comments as he was taking account of the social needs of the area.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg Has Deputy Bruton applied to join the Green Party?

Mr. Sargent: Information on Trevor Sargent Zoom on Trevor Sargent Deputy Bruton would be welcome. He made his points eloquently. I applaud him for doing so because these points had to be made.

The Minister of State's assertion that this measure is based on best international practice attempts to pull the wool over our eyes in that this kind of peat station would not be allowed to be built in many other countries. It is interesting that a company like Statoil had to come to Ireland to build its fossil fuel burning electricity generating station as Norway's rules and its adherence to the Kyoto Protocol, which is far more rigorous than our adherence to it, would not allow Statoil to construct such a plant in Norway. The international experience to which the Minister of State may be comparing us comprises countries which we would not claim to be in our league and which do not have the standards to which we claim to aspire. I hope we might learn from the best international practice rather than dwelling on a short-term consideration of a finite resource we need.

The argument concerning security of supply also applies to the Corrib field. I raised this issue [1437] during debate on the Gas Regulation Bill. Economists suggest that the best way in which we can take advantage of our finite natural resources is to wait until the price is right. They suggest that we should not use these resources just because they have been found. This point also applies to peat. The investment which this station will require is badly needed in these areas and let it be spent there. However, it should not be drained into the pockets of those who will benefit most, namely, those who construct the plant. The benefit should go to those living in Laois, Offaly, Kildare and other areas from which Deputies present come. We are all concerned about such people.

Deputy Stagg is correct in stating that this is not double taxation. It is treble taxation. There is a PSO requirement, which is a form of taxation, although how it will avoid affecting the electricity bill will be worthy of a conjuror's handbook. However, it will also need to be paid for in emission trading. That has not been quantified in any serious way, despite the amount of research available to the Government and the amount of consultancy that the Department of Public Enterprise has engaged over the year. We are still waiting for some estimate of what emissions trading will cost this country, given the present inefficiencies in terms of energy and our transgressions in emissions of greenhouse gases. We are not getting that figure and I can only surmise that we are talking billions.

At the moment we are definitely out of line and increasingly wide of the mark with regard to greenhouse gas emissions. Who will pay those billions? It seems to me this issue will revisit the taxpayer and that the people in the Laois-Offaly area and other areas which currently depend on peat will, in turn, have to pay. We will give them money with one hand and take it back with the other. That is the reality.

In terms of treble taxation, we do not need to cast our minds too far into the past. It was only yesterday that we were talking about storm damages and flooding and the expenses involved, including the compensation that was being demanded from the Government for these appalling acts of destruction. Tonight we will deal with a motion on insurance. If ever there was a barometer of the increasing costs of climate change brought about by ignoring the growing level of greenhouse gas emissions, the insurance industry is it. The premiums associated with storm damage and weather-related claims are increasing year by year – exponentially, in fact, as time goes on. We are dealing, again, with the same people that the Minister claims to want to help with the PSO. This has to be one of the best examples of short-term, narrowly-focused thinking which probably has more to do with the next general election than with the long-term benefits of a sustainable energy policy, which this country needs to consider.

Because the amendment is couched in language that needs to be very closely examined – I [1438] do not think the word “turf” is actually mentioned – it is very difficult to say for definite what the Minister was thinking in waiting until this debate before putting it down. However, it is more and more clear as the debate goes on that these amendments do not belong in the Sustainable Energy Bill and it is simply an expedient measure so that the Minister can do the bidding of people like the Minister for Foreign Affairs, who seems to be one of the strongest backers of this amendment and has been pushing it on Committee Stage. Seen in the cold light of day, this is a backwards step and I hope we can get away from the short-term thinking behind this amendment and start benefiting the people we claim to want to benefit, in a sustainable, long-term fashion.

Mr. Stanton: Information on David Stanton Zoom on David Stanton This interesting debate is rendered all the more interesting by the production of the amendments at such a late stage. Did the Minister invite every Member of the House to this briefing, or was it just a few people? I certainly did not get any notification of a briefing or of any changes in the amendments. I put in a great deal of work on Committee Stage, yet I got no letter. Maybe my colleague did, but if something as important as this is being done every Member should be informed by letter that the amendments will be introduced. For that reason alone, the Minister should consider postponing taking these amendments and introducing them another day, because obviously we will run out of time today. In future every Member of the House should be informed a few days or a week in advance when new amendments will be introduced. The Department is not so short of paper that it could not do that.

There is no doubt that we need energy and there is no doubt that we need to become more self-reliant. We cannot remain dependent on foreign gas, foreign oil and so on. I welcome, as I think we all do, the ideal of sustainable energy such as wind and wave energy, biomass and solar power—

Mr. Sargent: Information on Trevor Sargent Zoom on Trevor Sargent —and energy conservation.

Mr. Stanton: Information on David Stanton Zoom on David Stanton —and energy conservation, which we raised on Committee Stage and tried to have included in a specific way in the Bill. However, we must also be realistic. Bord na Móna is a fantastic company and have done a great deal of good for the country throughout the years. Our technology has also been exported world-wide. I asked the Minister of State a question a while ago and he did not give me the information I required, so I will ask it again. Does he have any idea of how long the peat will last? When these stations are constructed, how many years do we have for electricity production through peat-burning? Is it ten, 20 or a hundred years? He might also reiterate Deputy Stagg's [1439] point – sometimes it feels like we are dealing with two Ministers here.

Mr. Jacob: Information on Joe Jacob Zoom on Joe Jacob On occasion.

Mr. Sargent: Information on Trevor Sargent Zoom on Trevor Sargent It is because they are agreeing with each other.

Mr. Stanton: Information on David Stanton Zoom on David Stanton He might tell us about the price structure. I understand there will not be a price increase for the consumer but I would like the Minister of State to make that very clear and to tell us how the restructuring will take place.

To return to the issue of carbon dioxide, greenhouse gas emissions and so on, we need to consider the carbon sink idea. Instead of peat, we could burn timber, which is renewable, in pellet – or timber-burning stations. Does the Minister think the proposed stations could some day be converted to timber-burning ones? We can grow trees quickly and well in this country and we should explore and invest in this technology. Sustainable Energy Ireland, when it is set up, will, I hope, promote the technology.

It would be useful to know that while we do need the energy and employment provided by peat-burning stations in the short-term, in the medium to longer term we could explore the possibility of converting the stations to timber-burning ones. That would keep everyone happy. We could grow our forests, growing different types of wood, providing employment in cutting the trees, processing the timber and so on and then re-plant the forests after burning, thus supporting the carbon cycle and not creating any excess carbon dioxide. Deputy John Bruton spoke of the importance of taking a long-term view and he is right. I would be interested to hear the Minister's response to those ideas and whether they are possible.

Mr. Jacob: Information on Joe Jacob Zoom on Joe Jacob This has been a wide-ranging discussion. As Deputy Stagg said, I was delighted to see Deputy John Bruton, an eminent Member of this House and former Taoiseach, entering our debate. That is not to say that I agree with the point he was making. Obviously he made a very valid point in stating the concern that is there, and should be there, with regard to emissions trading. This faces us down the line, as Deputy Sargent has said today and many times before.

Because of our strong economy we are out of synchronisation with what we signed up to at Kyoto. We undertook to hold our increase of noxious emissions to 13% by 2010 over and above the level that obtained in 1990 but if we continue on a business as usual basis, we will be at 35% rather than 13% by then. It needs to be tackled and it is being tackled. Deputy John Bruton said that there was no plan or policy and I totally reject that assertion. There is a very strong policy and there are plans in situ. My Green Paper on sustainable energy was published two years ago and the Minister for the Environment and Local [1440] Government published his national climate change strategy. These are the plans and the policies are contained within those documents.

We have already embarked on developing renewable energy resources, particularly wind energy, to the extent that we will have 12% of our total energy requirement produced in this way by 2005. The EU requires us to have 13% by 2010 and I am convinced that we will be way ahead of 12% by 2005 from the response to AER 5 which was oversubscribed by more than 40%. We were offering 255 megawatts of electricity and we were able to announce offers of 370 megawatts earlier this year. Offshore fuel is coming on stream and we have a number of concerns talking about 1,500 megawatts of offshore production off our east coast. If that is put into the context of a total energy consumption of 3,500 megawatts we see the very real potential of renewable energy sources, particularly wind. That technology has improved a great deal and is best suited to the climatic conditions of this country. There are problems regarding the grid and connection allied to the fact that the source of energy can be interrupted – when there is no wind there is no production. We cannot rely on it in toto but we are certainly moving rapidly to harness wind energy.

Security of supply has to be paramount. There is no use talking about a strong economy as current and potential investors would soon turn away if there was not an assured energy supply now and into the future. The security of supply factor is important. I am a great advocate of using gas, the cleanest of all our fossil fuels. There is plenty of it around and we have indigenous sources deo gratias in terms of the recent Corrib find as our Kinsale supplies are petering out. We are dependent on imports and are putting the infrastructure in place. That is the reason for what we are doing here today in terms of the most extensive and ambitious gas infrastructural undertaking ever in this country by BGE, in terms of onshore infrastructure and, in particular, the second interconnector, again for the purpose of ensuring security of supply.

All these things are happening and it is essential that we have indigenous supply. There was reference to a variety of sources such as peat, gas and as many renewable sources of energy as we can take on board in addition to wind, such as wave energy, solar energy and so on. I firmly reject the statement that there is not a plan or a policy. It is there and is being adhered to and is progressing rapidly.

The national climate change strategy takes account of the new peat station. It is very important to state that. As I have said already, and as Deputy Stagg said, the new station will replace older stations with more efficient technology and best practice. Earlier, Deputy Stanton asked about the peat reserves and I neglected to address the question. The figure of 15 years is in my mind. I want to check that and I will come [1441] back to the Deputy as the area of peat does not come under my remit.

Mr. Stagg: Information on Emmet Stagg Zoom on Emmet Stagg I think it is 25 years.

Mr. Sargent: Information on Trevor Sargent Zoom on Trevor Sargent And then what?

Mr. Jacob: Information on Joe Jacob Zoom on Joe Jacob As has already been said, it is a finite resource – as is gas – although as Deputy John Bruton said there is plenty of it around.

There have been repeated questions about the cost and double charges and treble charges. I am getting confused with those interpretations. We should remember that we are dealing here with a change to the levy recovery mechanism. The Electricity Regulation Act 1999, already provides for a public service obligation levy for the construction of peat stations and renewable energy plants. The work has already been done and we are only changing the mechanism. I am satisfied it makes no material difference to the amount to be recovered or the amount that will be recovered from individual electricity consumers. As I have already pointed out, the change is necessary arising out of European Commission deliberations on the matter and to ensure that the electricity market is not distorted.

Deputy Stanton referred to the use of timber in energy production and I would like to see that coming on stream. It is being looked at in terms of its potential. We have a significant amount of forestry that did not thrive, which would be ideally suitable. I understand there may be difficulties in harvesting it in terms of extracting it from some areas, but it is there and I hope that constraint can be overcome. It is one of the renewable resources that is being seriously looked at and I share the Deputy's aspiration to get to that stage.

Mr. Stanton: Information on David Stanton Zoom on David Stanton The Minister of State has said there will not be a price increase as a result of this mechanism. May I also bring to his attention that, in Sweden and other countries, the technology exists to harvest the type of timber he has mentioned efficiently and effectively. Electricity is being generated in the countries concerned, using the type of timber to which the Minister of State has alluded. I hope the agency, when it has been established, will make it a priority to investigate these matters and support them as much as possible.

Progress reported; Committee to sit again.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.

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